The Dollar Stalls Following NFP Release

The US Dollar had enjoyed a rather impressive run this past week despite a number of risk trends that push back a rate hike for this year. The ICE Dollar Index rose over one percent (1.3 percent) marking its best week since the Brexit vote sent investors running to the world’s number one safe haven currency. The motivations of this recent rise higher seem to be the same as it was when the United Kingdom voted to leave the Eurozone. Forex investors needing a viable and safe alternative to a whole slew of weaker currencies to choose from. Will this recent flight of capital into the best combination of yield potential and safe haven standing fuel a new Dollar climb? Without tipping into a full scale risk aversion, that is. Or will familiar themes regain control of the almighty Buck and the broader financial markets?

As Forex traders start to trade this week, they will be looking at one major fundamental theme. The US Dollar to draw capital as most of its major counterparts have troubles of their own. The USD/JPY Forex market is the most prominent breakdown after ten months of bearish momentum. The trend now lacks a credible them to push it lower. However, there is a steady buildup of skepticism that is undermining the Bank of Japan to devalue their currency. Then there was this past week’s drama with the collapse of the Sterling Dollar as the GBP/USD tanked. It is still hard to determine whether the Sterling has been discounted enough or events will continue to batter the British Pound as this Forex market is trading at three decade lows.

Then there is the seemingly bulletproof euro. The EUR/USD has seen very little strength towards the Dollar after a year and a half of broad based weakness for the euro. The last several weeks have seen and a rather strong downshift as pressure mounts on the Dollar. The European Central Bank has yet to lose confidence from Forex traders with their ability to control their waning economy or strength of their currency. A similar situation to the Japanese yen. There has also been no threat of existential risk to the European Union and European Monetary Union from the fear gripping the British Pound. As mentioned above, the EUR/USD seems to be bullet proof, for now. However, Forex traders once thought that of the USD/JPY and the GBP/USD Forex markets as well.